According to Karnataka’s Finance Minister, the implementation of GST 2.0 could lead to significant financial losses for various states across India, amounting to approximately Rs 1.5 lakh crore. This assertion was made during an interview with NDTV, where the minister expressed concerns over the revised Goods and Services Tax framework that is set to be rolled out. The anticipated losses stem from the changes in the revenue-sharing mechanism and the way GST is structured, which may not favor all states equally.
The minister highlighted that states heavily reliant on certain revenue streams could face severe budgetary constraints if the new GST system fails to compensate them adequately. The concern is particularly acute for states like Karnataka, which contribute significantly to the GST revenue pool. If the new framework does not align with the fiscal needs of these states, it could lead to a situation where essential public services and developmental projects face funding shortages.
Additionally, the minister called for a thorough review and consultation process involving all stakeholders before the final implementation of GST 2.0. He emphasized the importance of ensuring that the interests of all states are safeguarded to maintain fiscal health and economic stability. The potential for widespread financial implications underscores the need for a balanced approach in tax reforms that considers the diverse economic landscapes of individual states. As the GST 2.0 rollout approaches, it will be crucial for the central government to address these concerns to foster cooperative federalism and ensure that states can continue to thrive economically.
